Public sector pay policy 2019-2020

Foreword by Derek Mackay MSP, Cabinet Secretary for Finance, Economy and Fair Work

I am pleased to set out the Scottish Government's Public Sector Pay Policy for 2019-20. A distinctive pay policy for Scotland – one that is progressive, continues our focus on fairness, sustainability, value for money and takes the next step on the journey we started with our Programme for Government commitment to lift the 1 per cent public sector pay cap.

As part of this Government's wider spending plans announced in the Scottish Budget, this pay policy recognises the continued pressure on household budgets and balances this with a fair deal for public sector workers and affordability to the public purse. It is designed to support our economy by delivering real wage growth, tackle income inequality, especially for the very lowest paid and demonstrate our commitment to investing in high quality public services for all - underlining our distinctly Scottish approach.

We are taking this approach in the context of the uncertainty that Brexit poses, against a backdrop of a challenging financial outlook. In spite of a commitment to 'end austerity', the UK Government has set out plans which will provide virtually no real terms growth in the fiscal resource budget up to 2023-24, other than growth targeted on the NHS. With the Scottish Government's discretionary budget from the UK Government around 7 per cent lower in real terms in 2019-20 than at the start of the decade, this continued constraint on spending on essential public services is very damaging.

Even when faced with these financial constraints, I am clear that the 2019-20 Public Sector Pay Policy must continue to take a progressive approach to pay, delivering a guaranteed 3 per cent increase to all those earning up to £36,500, up to 2% of the baseline paybill for those earning between £36,500 and £80,000 and, in support of reducing the overall income gap, delivers an overall cash cap of £1,600 for those earning above £80,000.

This will ensure that over 70 per cent of staff covered directly by our Public Sector Pay Policy will receive an increase of at least 3%. The policy also provides the flexibility for individual employers to use their discretion to reach decisions on pay progression for staff and to consider giving a greater than 3% pay award to the very lowest paid as well as awarding a further 1% to staff who are at the top of their pay scale.

The 2019-20 Public Sector Pay Policy is underpinned by our commitment to pay the real Living Wage and re-affirms our unique position on no compulsory redundancy which is protecting public sector jobs and front line services. While this is only a one year pay policy, it takes an important next step on the journey towards pay restoration. I aim to take a longer term view on Pay Policy as I shape our spending plans in Scotland beyond 2019-20, continuing on our path of balancing affordability and offering a fair deal for staff, making Scotland's public services a great place to work.

I wish to acknowledge the contribution of public sector workers in helping us to achieve our ambitions and deliver our priorities right across Scotland. I want to express my thanks for your efforts to ensure the effective delivery of public services at a time when budgets are being squeezed and other pressures continue to affect household incomes.

This policy is about doing the right thing for Scotland's public services, which are a core part of achieving our ambitions for Scotland and fundamental to our growth and prosperity. As we take on new powers and become responsible for a wider range of public services, working together with our public bodies and our trade unions, we can build a better, stronger and more inclusive Scotland.

Derek Mackay Cabinet Secretary for Finance, Economy and Fair Work